Question

Advanced miniature development manufactures computer graphics cards (gpus). standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 4,160 gpus were as follows: cost driver standard costs actual costs direct materials 110,000 lbs. at $6.30 115,000 lbs. at $6.50 direct labor 2,080 hours at $15.80 2,000 hours at $15.40 Factory overhead rates per direct labor hr., based on 100% of normal capacity of 2,000 direct labor hrs.: variable cost, $4.25 $8,200 variable cost fixed cost, $6.00 $12,000 fixed cost Each gpu requires 0.5 hour of direct labor. Instructions determine the: a. direct materials price variance b. direct materials quantity variance c. total direct materials cost variance d. direct labor rate variance e. direct labor time variance f. total direct labor cost variance g. the variable factory overhead controllable variance h. fixed factory overhead volume variance i. total factory overhead cost variance.

Answer 1

The direct materials price variance is $5,800 unfavorable. The direct materials quantity variance is $33,250 favorable. The total direct materials cost variance is $27,450 favorable.

Step-by-step explanation:

The direct materials price variance is calculated by finding the difference between the actual cost and the standard cost per unit of direct materials, and then multiplying that difference by the actual quantity used. In this case, the standard cost per unit is $6.30 and the actual cost per unit is $6.50. The actual quantity used is 115,000 lbs.

The direct materials quantity variance is calculated by finding the difference between the actual quantity used and the standard quantity allowed, and then multiplying that difference by the standard cost per unit. In this case, the actual quantity used is 115,000 lbs and the standard quantity allowed is 110,000 lbs. The standard cost per unit is $6.30.

The total direct materials cost variance is calculated by adding the direct materials price variance and the direct materials quantity variance. In this case, the direct materials price variance is $5,800 unfavorable and the direct materials quantity variance is $33,250 favorable, so the total direct materials cost variance is $27,450 favorable.

The direct labor rate variance is calculated by finding the difference between the actual rate per hour and the standard rate per hour, and then multiplying that difference by the actual hours worked. In this case, the actual rate per hour is $15.40 and the standard rate per hour is $15.80. The actual hours worked is 2,000 hours.

The direct labor time variance is calculated by finding the difference between the actual hours worked and the standard hours allowed, and then multiplying that difference by the standard rate per hour. In this case, the actual hours worked is 2,000 hours and the standard hours allowed is 4,160 hours (0.5 hour per gpu * 4,160 gpus). The standard rate per hour is $15.80.

The total direct labor cost variance is calculated by adding the direct labor rate variance and the direct labor time variance. In this case, the direct labor rate variance is $760 favorable and the direct labor time variance is $6,320 unfavorable, so the total direct labor cost variance is $5,560 unfavorable.

The variable factory overhead controllable variance is calculated by finding the difference between the actual variable factory overhead cost and the budgeted variable factory overhead cost. In this case, the actual variable factory overhead cost is $8,200 (based on 2,000 direct labor hours at a rate of $4.25 per hour). The budgeted variable factory overhead cost is $8,000 (based on 2,000 direct labor hours at a rate of $4.00 per hour).

The fixed factory overhead volume variance is calculated by finding the difference between the budgeted fixed factory overhead cost and the standard fixed factory overhead cost applied to production. In this case, the budgeted fixed factory overhead cost is $12,000 and the standard fixed factory overhead cost applied to production is $6,000 (based on 2,000 direct labor hours at a rate of $3.00 per hour).

The total factory overhead cost variance is calculated by adding the variable factory overhead controllable variance and the fixed factory overhead volume variance. In this case, the variable factory overhead controllable variance is $200 unfavorable and the fixed factory overhead volume variance is $6,000 favorable, so the total factory overhead cost variance is $5,800 favorable.